Intuitively, it seems like if Starship is able to travel all the way to Mars, it could also work as an Earth orbiting space station. The major challenges that jump out at me are the different radiation and temperature flux environments. That being said, Starship has so much upmass capability that anything needed to make this work should be easy to ship up.
As for the floated idea of a wet workshop, that would be super amazing. But seems a bit overkill and perhaps even wasteful?
I, too, love the idea of a wet workshop, but I see the problems. Mostly, tanks don’t need micrometeriod shielding and insulation, and weight-efficient shielding and insulation would not survive launch. The kind of protection you’d need to add would easily double the mass of the empty tank, or you’d have to somehow wrap the tank in space. The reward is enormous amounts of habitable volume, but I can’t see the cost.